In a surprising turn of events, Cathie Wood’s Ark Investment Management, the second-largest holder of Coinbase Global (COIN) stock, has doubled down on its investment in the well-known crypto exchange. This move comes shortly after the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase, causing the share prices to tumble.
ARK purchased an impressive 419,324 shares of Coinbase, valued at approximately $21.6 million based on Tuesday’s closing price of $51.61. This investment was divided across ARK’s Innovation ETF (NYSE:ARKK), the Next Generation Internet ETF (NYSE:ARKW), and the Fintech Innovation ETF (NYSE:ARKF). With this latest acquisition, ARK’s total Coinbase holdings increased to 11.44 million shares, bringing the estimated value of their position to a staggering $590 million. This is ARK’s first purchase since May 3.
However, the decision to invest further in Coinbase is not without controversy, especially considering the recent SEC lawsuit filed against both Coinbase and Binance. The SEC accused Coinbase of violating federal securities law by acting as a broker, exchange, and clearing agency all at once without registering as any such organization.
As a result of the lawsuit, Coinbase’s stock experienced a sharp decline, dropping over 12% by the end of the U.S. trading session on Tuesday. Despite this setback, it is worth noting that COIN’s year-to-date growth remains impressive, still boasting an increase of over 50%.
The move by ARK to invest more heavily in Coinbase can be interpreted in various ways. On one hand, some might view it as a vote of confidence in the crypto exchange’s ability to overcome the legal challenge posed by the SEC and ultimately prevail. In contrast, others may question the wisdom of such an investment, particularly in light of the potential regulatory issues looming over the entire crypto industry.
It is also important to consider the broader implications of this situation. If the SEC continues to crack down on cryptocurrency exchanges, it could serve as a wake-up call for the industry, possibly prompting new and more stringent regulations. In turn, this may lead to improved transparency and safety, benefitting both the investors and the market as a whole. However, it could also pose a threat to decentralized exchanges and the original ideals of the crypto movement.
In conclusion, ARK’s decision to double down on its Coinbase investment, despite the current legal trouble with the SEC, has undoubtedly caught the attention of the crypto community. Whether this move is considered bold or reckless remains to be seen, but it certainly highlights the ongoing challenges faced by both traditional finance institutions and the cryptocurrency market alike.